What You Need To Know About Saving for a Home in 2024

If you’re planning to buy a home, knowing what to budget for and how to save may sound intimidating – but it doesn’t have to be. One way to ease those concerns is to make sure you understand some of the costs you may encounter up front. And to do that, always turn to trusted real estate professionals. They can help you set a plan and take a strategic look at your budget and your process before you even get started.Here are just a few things experts say you should be thinking about.1. Down PaymentSaving for your down payment is likely top of mind as you set out to buy a home. But do you know how much you’ll need? While every buyer’s situation is different, there’s a common misconception that putting 20% of the purchase price down is required. An article from the Mortgage Reports explains why that’s not always the case:“The idea that you have to put 20% down on a house is a myth. . . . The right amount depends on your current savings and your home buying goals.”To understand your options, partner with trusted real estate professionals to go over the various loan types, down payment assistance programs, and what each one requires. The more you know ahead of time, the easier the process will be.2. Closing CostsMake sure you also budget for closing costs, which are a collection of fees and payments made to the various parties involved in your transaction. Bankrate explains:“Closing costs are the fees you pay when finalizing a real estate transaction, whether you’re refinancing a mortgage or buying a new home. These costs can amount to 2 to 5 percent of the mortgage so it’s important to be financially prepared for this expense.”The best way to understand what you’ll need at the closing table is to work with a trusted lender. They can provide you with answers to the questions you might have.3. Earnest Money DepositIf you want to cover all your bases, you can also consider saving for an earnest money deposit (EMD). An EMD is money you pay as a show of good faith when you make an offer on a house. According to Realtor.com, it’s usually between 1% and 2% of the total home price.This deposit works like a credit. It’s not an added expense – it’s paying a portion of your costs upfront. You’re using some of the money you’ve already saved for your purchase to show the seller you’re committed and serious about buying their house. Realtor.com describes how it works as part of your sale:“It tells the real estate seller you’re in earnest as a buyer . . . Assuming that all goes well and the buyer’s good-faith offer is accepted by the seller, the earnest money funds go toward the down payment and closing costs. In effect, earnest money is just paying more of the down payment and closing costs upfront.”Keep in mind, an EMD isn’t required, and it doesn’t guarantee your offer will be accepted. It’s important to work with a real estate advisor to understand what’s best for your situation and any specific requirements in your local area. They’ll advise you on what moves you should make so you can make the best possible decisions throughout the buying process.Bottom LineWhen buying a home, being informed about what to save for is key. Partner with a local real estate advisor so you’ll have an expert on your side to answer any questions you have along the way.

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Retiring Soon? Why Moving Might Be the Perfect Next Step

If you’re thinking about retirement or have already retired this year, it’s a good time to consider if your current house is still a good fit for the next chapter in your life.Fortunately, you may be in a better position to make a move than you realize. Here are a few things to think about as you decide whether or not to sell and make a move.How Long You’ve Been in Your HomeFrom 1985 to 2008, the average length of time homeowners typically stayed in their homes was only six years. But according to the National Association of Realtors (NAR), that number is rising today, meaning many homeowners are living in their houses even longer (see graph below):When you live in a home for a significant period of time, it’s natural for you to experience a number of changes in your life while you’re in that house. As those life changes and milestones happen, your needs may change. And if your current home no longer meets them, you may have better options waiting for you.How Much Equity You’ve GainedAdditionally, if you’ve been in your house for more than a few years, you’ve likely built-up significant equity that can fuel your next move. That’s because the longer you’ve been in your house, the more likely it’s grown in value due to home price appreciation. Data from the Federal Housing Finance Agency (FHFA) illustrates that point (see graph below):While home price growth varies by state and local area, the national average shows the typical homeowner who’s been in their house for five years saw it increase in value by nearly 60%. And the average homeowner who’s owned their home since 1991 saw it more than triple in value over that time.Consider Your Retirement GoalsWhether you're looking to downsize, relocate to a dream destination, or simply be closer to loved ones, your home equity can be a key to realizing your homeownership goals. NAR shares that for recent home sellers, the primary reason to move was to be closer to loved ones.Whatever your home goals are, a trusted real estate agent can work with you to find the best option. They’ll help you sell your current house and guide you through buying the home that’s right for your lifestyle today.Bottom LineRetirement can bring about major changes in your life, including what you need from your home. Connect with a local real estate agent to explore the available homes in your area.

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Get Ready To Buy a Home by Improving Your Credit Score

As the new year approaches, the idea of buying a home might be on your mind. It’s an exciting goal to set, and it's never too early to start laying the groundwork. One crucial step to prepare for homeownership is building a solid credit score.Lenders review your credit to assess your ability to make payments on time, pay back debts, and more. It’s also a factor that helps determine your mortgage rate. An article from CNBC explains:“When it comes to mortgages, a higher credit score can save you thousands of dollars in the long run. This is because your credit score directly impacts your mortgage rate, which determines the amount of interest you’ll pay over the life of the loan.”This means your credit score may feel even more important to your homebuying plans right now since mortgage rates are a key factor in affordability, especially today.According to the Federal Reserve Bank of New York, the median credit score in the U.S. for those taking out a mortgage is 770. But that doesn’t mean your credit score has to be perfect. An article from Business Insider explains generally how your FICO score range can make an impact:“. . . you don’t need a perfect credit score to buy a house. . . . Aiming to get your credit score in the ‘Good’ range (670 to 739) would be a great start towards qualifying for a mortgage. But if you’re wanting to qualify for the lowest rates, try to get your score within the ‘Very Good’ range (740 to 799).” Working with a trusted lender is the best way to get more information on how your credit score could factor into your home loan and the mortgage rate. As FICO says:“While many lenders use credit scores like FICO Scores to help them make lending decisions, each lender has its own strategy, including the level of risk it finds acceptable. There is no single “cutoff score” used by all lenders and there are many additional factors that lenders may use to determine your actual interest rates.”If you’re looking for ways to improve your score, Experian highlights some things you may want to focus on:Your Payment History: Late payments can have a negative impact by dropping your score. Focus on making payments on time and paying any existing late charges quickly.Your Debt Amount (relative to your credit limits): When it comes to your available credit amount, the less you’re using, the better. Focus on keeping this number as low as possible.Credit Applications: If you’re looking to buy something, don’t apply for additional credit. When you apply for new credit, it could result in a hard inquiry on your credit that drops your score.A lender will help you navigate the process from start to finish, from assessing which range your score falls in to telling you more about the specifics for each loan type.Bottom LineAs you set your sights on buying a home in the upcoming year, a focus on boosting your credit score could help you get a better mortgage rate when the time comes. If you want to learn more, connect with a trusted lender.

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